Nick Gatfield, who has run Universal's Island Records since 2001, has overseen the success of Winehouse, singer Mika and pop bands The Sugababes, McFly and Busted.

Terra Firma private-equity boss Guy Hands, who bought EMI for £2.4bn last year, is to appoint Gatfield as president of A&R for EMI in Europe and North America.

Hands has been desperate to hire a senior executive to nurture talent after an exodus of stars including Radiohead.

Sir Paul McCartney also quit EMI before the Terra Firma takeover. The Rolling Stones announced this year that they would release their next album on Universal rather than EMI and a string of other artists such as Robbie Williams and Kylie Minogue have signalled their unhappiness.

Insiders say Terra Firma, which did not have a track record in the music business, has so far failed to look after key talent. EMI declined to comment.

But the appointment of Gatfield is recognition that the company needs a safe pair of hands to manage its bands. Gatfield, a pop star himself in Eighties band Dexy's Midnight Runners, cut his teeth in A&R at EMI between 1985 and 1992 when Blur and Radiohead joined.

This is the second high-profile appointment at EMI in a fortnight. Hands hired Douglas Merrill, Google's chief information officer, to the new role of president of digital business in Los Angeles on 2 April.

The return of Gatfield to EMI was not unexpected. Last month Universal passed him over when it appointed David Joseph as head of UK operations, overseeing Island Records. It is thought Gatfield was not close to Universal's American supremo, Lucian Grainge.

Yesterday Hands lost his battle to take over Chrysalis, the music business founded by Chris Wright. The £104m offer was dismissed as 'significantly undervaluing' Chrysalis.